The Best of Killer Innovations: Essential KPIs

Resuming our Best of Killer Innovation Series, we hone in on six categories of essential KPIs that will help you successfully predict and keep track of crucial details that will allow you to run your organization smoothly.

This episode addresses questions from listeners on innovation KPIs.  After clocking 12,000 miles in the mobile Innovators Studio, I'm back in Colorado.  On the road, I talked with interesting innovators and analysts. Taking a break from interviews, I'd like to answer your questions on measuring innovation success.

There are hundreds of Key Performance Indicators (KPIs) to measure innovation success. What are the right innovation KPIs to use?  What KPIs will give insight into the innovation process?   KPIs should be unique to your organization.  Think through what KPIs will measure and how that can guide innovations and your organization.

KPI Building Blocks

I've broken innovation KPIs into categories, like building blocks.  Build up the blocks to get a complete perspective on your innovation effort.

Six categories for Innovation KPIs:

Idea process /managing the idea funnel

• What's done to get ideas, put them in a funnel, review, manage and analyze them?
  • Raw ideas
  • Raw ideas validated
  • Ideas prototyped
  • Age of ideas

Idea commercialization

• Innovation idea brought to market.
  • Innovations that became a product
  • Innovations that make a profit
  • Are early customers willing to pay a margin premium?
  • Innovations purchased
  • resources in the organization aligning to make the product a reality?

Financial impact

• Tough to measure – long lag from the time of investment to product launch in the market
  • Revenue from new innovations
  • Profit from innovations
  • Revenue protected by patents
  • Revenue from patent licensing

Customer impact

• Customer success compared from old products to new innovation
  • What has the latest product allowed customers to achieve?
  • How many customers have shifted to new ones?
  • Market share trend for innovation – grabbing from competitors?

Organizational impact

• New products/services have an impact
• Can pull organization into the new category of focus
  • The ratio of sales from old versus new – sales ramping up for further/declining for old?
  • The ratio of profit from old versus new
  • Investments – Is investment shifting from old to new?
  • Rate of return on innovation investment
  • Has it driven brand awareness?

Pure Innovation KPIs

• Catch-all
  • Staff trained for innovation
  • Use of formal creativity tool
  • Implementation and use of Idea Management System
  • Structured problem-solving tools
  • Committed resources to innovation
  • Patents/year

Guidance

1. Pick three to five essential KPIs from each category that work for your organization.
2. Ensure you can measure them.
3. Validate KPIs that drive the correct behaviorand achieve the desired outcome.
4. Test/adjust KPIs as needed.
5. Share with the community.

We'd love your feedback.  What do you think about the five-minute focus in the last segment of today's show?

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To learn more about KPIs, listen to this week's show: The Best of Killer Innovations: Essential KPIs.